" FRACTALs " Technical Indicator

Many people believe that the markets are random. In fact, one of the most prominent investing books out there is "A Random Walk Down Wall Street" (1973) by Burton G. Malkiel, who argues that throwing darts at a dartboard is likely to yield results similar to those achieved by a fund manager (and Malkiel does have many valid points).

However, many others argue that although prices may appear to be random, they do in fact follow a pattern in the form of trends. One of the most basic ways in which traders can determine such trends is through the use of fractals. Fractals essentially break down larger trends into extremely simple and predictable reversal patterns. This article will explain what fractals are and how you might apply them to your trading to enhance your profits.

What Are Fractals?
When many people think of fractals in the mathematical sense, they think of chaos theory and abstract mathematics. While these concepts do apply to the market (it being a nonlinear, dynamic system), most traders refer to fractals in a more literal sense. That is, as recurring patterns that can predict reversals among larger, more chaotic price movements.

These basic fractals are composed of five or more bars. The rules for identifying fractals are as follows:

* A bearish turning point occurs when there is a pattern with the highest high in the middle and two lower highs on each side.
* A bullish turning point occurs when there is a pattern with the lowest low in the middle and two higher lows on each side.

The fractals shown in Figure 1 are two examples of perfect patterns. Note that many other less perfect patterns can occur, but the basic pattern should remain intact for the fractal to be valid.

The obvious drawback here is that fractals are lagging indicators - that is, a fractal can't be drawn until we are two days into the reversal. While this may be true, most significant reversals last many more bars, so most of the trend will remain intact (as we will see in the example below).

Applying Fractals to Trading
Like many trading indicators, fractals are best used in conjunction with other indicators or forms of analysis. Perhaps the most common confirmation indicator used with fractals is the "Alligator indicator", a tool that is created by using moving averages that factor in the use of fractal geometry. The standard rule states that all buy rules are only valid if below the "alligator's teeth" (the center average), and all sell rules are only valid if above the alligator's teeth.

Figure 2 is an example of such a setup:

Figure2
As you can see, the primary drawback to this system is the large swings that take place. Notice, for example, that the latest fractal had a drawdown of over 100 pips and still has not hit an exit point. However, there are countless other techniques that can be applied in conjunction with fractals to produce profitable trading systems.

Figure 3 shows a forex trading setup that uses a combination of fractals (multiple time frames), Fibonacci-based moving averages (placed at 89, 144, 233, 377 and their inverses) and a momentum indicator. Let's look at a recent trade setup for the GBP/USD currency pair to see how fractals can help:

Figure 3
Here is a basic rule setup that is used when using a chart with a four-hour time frame:

* Initiate a position when the price has hit the farthest Fibonacci band, but only after a daily (D1) fractal takes place.
* Exit a position after a daily (D1) fractal reversal takes place.

Notice how the fractals pinpoint meaningful tops and bottoms? This helps to take the guesswork out of deciding at which Fibonacci level to trade - all we have to do is check to see if the daily fractal occurred. We should also note that the trend strength began increasing at the sell fractal, and topped at the buy fractal. Although we lose some pips with the confirmation, it saves us from losing out on mere market noise - 139 pips certainly isn't bad for three days! (For further reading, see Trading Without Noise.)

Things to Consider
Here are a few things to remember when using fractals:

* They are lagging indicators. They are best used as confirmation indicators to help confirm that a reversal did take place. Real-time tops and bottoms can be surmised with other techniques.
* The longer the time period (i.e. the number of bars required for a fractal), the more reliable the reversal. However, you should also remember that the longer the time period, the lower the number of signals generated.
* It is best to plot fractals in multiple time frames and use them in conjunction with one another. For example, only trade short-term fractals in the direction of the long-term ones. Along these same lines, long-term fractals are more reliable than short-term fractals.
* Always use fractals in conjunction with other indicators or systems. They work best as decision support tools, not as indicators on their own.

Conclusion
As you can see, fractals can be extremely powerful tools when used in conjunction with other indicators and techniques, especially when used to confirm reversals. The most common usage is with the "Alligator indicator"; however, there are other uses too, as we've seen here. Overall, fractals make excellent decision support tools for any trading method.


--- by Justin Kuepper / investopdia ------

Forex Software Review : LMT Forex Formula

Recently I was invited to beta test the new LMT Forex Formula system by Dean Saunders, the creator of the immensly popular 10 Minute Forex Wealth Builder. I am a great fan of the 10 Minute Forex system, so I was very excited to see what this new product was all about. Is this system worth buying? I believe it is..see my full review below.
The LMT Forex Formula promises to be the perfect solution for the part time Forex trader - a trading system that is 100% mechanical, 82% accurate and only requires 15 minutes of work every day. What exactly is the LMT Forex Formula? Let’s start by looking at what this system is NOT. The LMT Forex Formula is not a Forex Robot that trades automatically. It is Not a robot that trades for you. They have a software which shows you the trades but they do NOT place trades for you. You will
manually make the trades which keeps you informed on your trades.

This system is designed to earn 100’s of pips per trade.
It is good for real traders who want to have control over the
trades that you want to make.

This system comes with special indicators that alert you when trading opportunities occur, but you still place and manage the trades yourself. This means that you are not tied to a specific broker and always remain 100% in control of your own trading.
The second thing that the LMT Forex Formula is not is a scalping or intraday trading system that requires you to place many small trades every day. This system is all about large movements in the currencies and is designed to earn hundreds of pips per trade. You will get around 2-3 trades per week and sometimes stay in these trades for days before taking large profits.

What I like about the LMT Forex Formula
I have only tested the LMT Forex Formula for a short while, but the beta testing results I have seen so far has been very impressive. Those who trade actively with this system frequently report large winning trades of more than 300 pips and conservative results show that it is possible to easily make around 500 pips per month by only trading the one or two best setups every week.

Another great thing about this system is that you can use it with ANY broker, you are not forced to use a Metatrader broker like you are with all the Forex robots. The custom indicator requires Metatrader, but you can easily use a free Metatrader demo account for your trade signals and charting while doing your actual trading at a different broker.

The launch price is very affordable. Just the money management techniques that Dean teaches in this system alone is worth this price and if you consider that the product comes with a 60 day money back guarantee, then this is really a low-risk purchase.

Conclusions and Recommendations
Any Forex product by Dean Saunders is always worth investigating and the LMT Forex Formula is definitely one of the the easiest, most accurate Forex trading systems I have ever come across. If you are looking for a system that is almost 100% mechanical, but still under your full control, then I definitely recommend that you check this one out. Once you feel what it is like to take 500 pips profit in one trade off the daily charts you will never be interested in short term scalping methods again.

---- by:fxtradingreviews ------

SEE...FapTurbo Forex Robot Review and Free Download...Forex Trader Reveals : What you must know before you buy Forex Robot.

Forex Trading System

a Simple One That’s Proven and Made Millions
Enclosed you will find a free Forex trading system with one rule which is simple and has made savvy traders huge gains for over 25 years. Let’s take a look at how you can use it for bigger Forex gains…

Of course you can buy a forex trading system but most sold are junk and only have simulated back tested results - this one on the other hand has made gains for over 25 years and will continue to do so.

The system was devised by one of the trading greats - Richard Donchian who is considered the grandfather of modern trend following and his insight on channels and the 4 Week Rule (the trading system below) are two methods all traders should know about.

Let’s take a look at how it works and it’s based on one simple rule, here it is.

Buy a new 4 week high and hold the position, until a 4 week low is hit then liquidate the long position and go short. Keep doing the following - buy new 4 week highs and sell new 4 week lows thereafter and always keep a position in the market.

You can’t get a much simpler system than the above and you don’t even have to think about what to do, the rule is clear and objective, you can simply follow it and it works; here’s why.

Forex markets tend to trend for long periods and these trends can be for many weeks or months. These trends tend to start and continue from new market highs or lows, so this system will put you in on every major trend and help you get a good chunk of the profits.

Don’t worry about its simplicity - forex markets are best suited to simple, robust systems. The trader who complicates his trading strategy normally will see it fail, as it has too many elements to break.

While the system is simple and works, most traders can’t follow it.

It takes tremendous discipline to follow long term trends and they prefer to use shorter term systems which make them feel better or safer - but of course don’t work. They also follow for the myths perpetrated by vendors, that you don’t get drawdowns in Forex - but you do, even the best systems have them. You have to trade through them, learn to take short term losses and look at the big picture which is longer term gains.

This system will never go out of date and is simple to understand, it also doesn’t take long to operate about 15 - 30 minutes a day and the rule tells you exactly what to do.

If you are looking for a long term Forex trading system that’s proven, rather than a simulated one which has never been traded and won’t work, then check out the free Forex trading system which is the 4 Week Rule and you maybe glad you did.

Forex Indicator - Accumulative Swing Index

Trading with ASI indicator involves the following details:
ASI has positive value — uptrend.
ASI has negative value — downtrend.
ASI trend line breakout — validates a breakout on the price chart.
Details
What is Accumulative Swing Index
Welles Wilder, the creator of ASI indicator said, "Somewhere amidst the maze of Open, High, Low and Close prices is a phantom line that is the real market." The Accumulation Swing Index shows this phantom line - the line of the real market.
The Accumulative Swing Index uses a scale from 0 to 100 for an up trend and 0 to -100 for a down trend.

How to interpret ASI indicator
If a long-term trend is up, the ASI has a positive value; and if long-term trend is down indicator appears in a negative value. During sideways moving market, the ASI moves between + and - values.
Accumulative Swing Index is widely used to confirm or deny trend lines breakouts on Forex charts.
Trend lines are drawn on both: a chart and indicator’s graph and then compared against each other to confirm/dismiss trend line breakout signals.

How to trade with Accumulative Swing Index
Welles Wilder, developer of Accumulative Swing Index indicator, describes in his book "New Concepts in Technical Trading Systems" why ASI can be used for trend line breakout confirmations. He said, that ASI is able to show the real strength and direction of the market and since Accumulative Swing Index is heavily weighted in favor of the close price, daily upward and downward spikes do not adversely affect ASI.
Here is a quote from his book:
"When the Index is plotted on the same chart as the daily bar chart, trend lines drawn on the ASI can be compared to trend lines drawn on the bar chart. For those who know how to draw meaningful trend lines, the ASI can be a good tool to confirm trend-line breakouts. Often erroneous breaking of trend lines drawn on bar charts will not be confirmed by the trend lines drawn on the ASI. Since the ASI is heavily weighted in favor of the close price, a quick run up or down during a day's trading does not adversely affect the index."
Signal Buy with ASI occurs when indicator exceeds its previous Swing High.
Signal Sell occurs when ASI dips below its previous Swing Low.

Accumulative Swing Index chart example

Since ASI line represents real market price, Forex traders may effectively use classic technical analysis methods on the indicator itself:
- identify support/resistance levels,
- trend lines and true market direction,
- swings high/low,
- breakout setups
- and divergence between indicator and regular price charts.
Accumulative Swing Index indicator formula
ASI = ASI formula

Where:
C = Today's closing price
Cy = Yesterday's closing price
Hy = Yesterday's highest price
K = The greatest of: Hy - C and Ly - C
L = Today's lowest price
Ly = Yesterday's lowest price
O = Today's opening price
Oy = Yesterday's opening price
R = This varies based on relationship between today's closing price and yesterday's high and low prices
T = the maximum price changing during trade session

---- by; Forex Indicators / ASI -------

Forex; Trend line Strategy

Forex Tips & Strategy : How To Draw Proper Trend Line
Drawing trend line is sometime that is very subjective for most traders. From those trading books that are in the market, trend line is drawn by joining 2 or more swing lows or 2 or more swing highs. However the problem lies with there are a lot of swing highs and lows in most chart and which one should you use and which one should you ignore?

This is a topic that is suggested by one of our active newsletter subscriber who is a fellow trader. Therefore I am going to spend some time on this post to go through how you can draw proper trend line.

Basically there are 2 main types of trend line you can draw and they are

1) Common Sense Trend Line: This type of trend line is the most commonly used by traders and it basically makes use of 2 or more swing highs or lows to connect to form the line. Swing lows are formed when there is a candle that has 2 higher candles on its left and right and swing highs are formed when there is a candle that has 2 lower candles on its left and right.

Since there are quite a number of swing highs and lows in a particular chart, you need to be able to prioritise which are the more important ones.

Swing low usually forms a V-shaped pattern while swing high forms an N-shaped pattern. For swing low, the one with more higher candles on its left and right will be more significant than the one with lesser higher candles on its left and right and it works the same for the swing highs except that you should be looking for more lower candles.


When drawing common sense trend line, you will try to connect a few points and the line that has the most points connected will be the line you should be using to trade. The more swing highs or lows you manage to connect to form a trend line, the more powerful it is because there is more time the market is trying to break the line but failed and it will serve as a strong support or resistance.

One more thing to take note, if the trend line is breached by a candle, it will be no longer useful and you need to redraw another new trend line.


Personally I use a mix of these 2 ways of drawing trend line. The common sense trend line sometime serves as a long term trend line for me while the Tom Demark trend line serves as a short term trend line for me and both of them works rather well so far.
Hope that this post on how to draw trend line is useful for you.

--- by ; Kelvin / forex tips

Forex ; Trading Double Tops and Double Bottoms

Trading Double Tops and Double Bottoms
No chart pattern is more common in trading than the double bottom or double top. In fact this pattern appears so often that it alone may serve as proof positive that price action is not as wildly random as many academics claim. Price charts simply express trader sentiment and double tops and double bottoms represent a re-testing of temporary extremes. If prices were truly random, why do they pause so frequently at just those points? To traders the answer is that many participants are making their stand at those clearly demarcated levels.

If these levels undergo and repel attacks, they instill even more confidence in the traders who've defended the barrier and, as such, are likely to generate strong profitable countermoves. Here we look at the difficult task of spotting the important double bottom and double tops, and we demonstrate how Bollinger Bands can help you set appropriate stops when you're trading these patterns.


React or Anticipate?
One great criticism of technical pattern trading is that setups always look obvious in hindsight but that executing them in real time is actually very difficult. Double tops and double bottoms are no exception. Though these patterns appear almost daily, successfully identifying and trading them is no easy task.

There are two approaches to this problem and both have their merits and drawbacks. In short, traders can either anticipate these formations or wait for confirmation and react to them. Which approach you chose is more a function of your personality than relative merit. Those who have a fader mentality - who love to fight the tape, sell into strength and buy weakness - will try to anticipate the pattern by stepping in front of the price move.



Reactive traders, who want to see confirmation of the pattern before entering, have the advantage of knowing that the pattern exists but there's a tradeoff: they must pay worse prices and suffer greater losses should the pattern fail.


What's Obvious Is Not Often Right
Most traders are inclined to place a stop right at the bottom of a double bottom or top of the double top. The conventional wisdom says that once the pattern is broken, the trader should get out. But conventional wisdom is often wrong.

Leaving the trade early may seem prudent and logical, but markets are rarely that straightforward. Many retail traders play double tops/bottoms, and, knowing this, dealers and institutional traders love to exploit the retail traders' behavior of exiting early, forcing the weak hands out of the trade before price changes direction. The net effect is a series of frustrating stops out of positions that often would have turned out to be successful trades.



What Are Stops For?
Most traders make the mistake of using stops for risk control. But risk control in trading should be achieved through proper position size, not stops. The general rule of thumb is never to risk more than 2% of capital per trade. For smaller traders, that can sometimes mean ridiculously small trades.

Fortunately in FX where many dealers allow flexible lot sizes, down to one unit per lot - the 2% rule of thumb is easily possible. Nevertheless, many traders insist on using tight stops on highly leveraged positions. In fact, it is quite common for a trader to generate 10 consecutive losing trades under such tight stop methods. So, we could say that in FX, instead of controlling risk, ineffective stops might even increase it. Their function, then, is to determine the highest probability for a point of failure. An effective stop poses little doubt to the trader over whether he or she is wrong.

Implementing the True Function of Stops
A technique using Bollinger Bands can help traders set those proper stops. Because Bollinger Bands incorporate volatility by using standard deviations in their calculations, they can accurately project price levels at which traders should abandon their trades.
The method for using Bollinger-Bands stops for double tops and double bottoms is quite simple:

1. Isolate the point of the first top or bottom, and overlay Bollinger Bands with four standard-deviation parameters.
2. Draw a line from the first top or bottom to the Bollinger Band. The point of intersection becomes your stop.

At first glance four standard deviations may seem like an extreme choice. After all, two standard deviations cover 95% of possible scenarios in a normal distribution of a dataset. However, all those who have traded financial markets know that price action is anything but normal - if it were, the type of crashes that happen in financial markets every five or 10 years would occur only once every 6,000 years. Classic statistical assumptions are not very useful for traders. Therefore setting a wider standard-deviation parameter is a must.
The four standard deviations cover more than 99% of all probabilities and therefore seem to offer a reasonable cut-off point. More importantly they work well in actual testing, providing stops that are not too tight, yet not so wide as to become prohibitively costly. Note how well they work on the following GBP/USD example.


More importantly, take a look at the next example. A true sign of a proper stop is a capacity to protect the trader from runaway losses. In the following chart, the trade is clearly wrong but is stopped out well before the one-way move causes major damage to the trader's account.

Conclusion
The genius of Bollinger Bands is their adaptability. By constantly incorporating volatility, they adjust quickly to the rhythm of the market. Using them to set proper stops when trading double bottoms and double tops - the most frequent price patterns in forex - makes those common trades much more effective.

--- by; Boris Schlossberg / director of currency research at GFT Forex. ----

Forex Trading System

Profitable Trading System
Open any chart for any currency pair, any time frame. I will use EUR/USD 1H as an example.
Next, attach Bollinger bands and OsMA indicators. Default settings for both.
What we are going to use here is a classic trading method called Divergence trading. divergence simply happens when the indicator and price are going in opposite directions.

The indicator we are going to use for Divergence is the OsMA indiactor.

To avoid false Divergence signals, we are going to use Bollinger bands. Valid signals are only the ones that happens when price hits overbought – oversold levels of Bollinger bands.
Images1


When that happens we should know that price will reverse. In the above example, price was going up. So we are waiting for a sell signal. If price was going down, that means we are waiting for a buy signal.


Entry Rules –
Buy signal :

1 – Divergence
2 – Price hits Bollinger band’s oversold levels

Entry signal:
1 – when price starts to reverse up from the oversold level
2 – OsMA forms a new bar above 0 level.

Images2

Entry Rules –
Sell signal :
1 – Divergence
2 – Price hits Bollinger band’s overbought levels

Entry signal:
1 – when price starts to reverse down from the overbought level
2 – OsMA forms a new bar below 0 level.

Images3

Stop Loss :Last support/ resistance level.
Target :You have the choice to exist your trades when ..
1 – price hits the opposite Bollinger band’s level Or
2 – an opposite signals is generated

This system works great on 15M time frames and higher. Not recommended for smaller time frames.
The system is not to be used with major news releases.

It’s not the holy grail, but it’s a very good start. Try it and remember that practice makes perfect.

----- by ; Forex Warlord -------

Forex ; Ross Hook Trading Strategy

Joe Ross has been trading and investing since his first trade at the age of 14, and is a well known Master Trader and Investor. He has survived all the up and downs of the markets because of his adaptable trading style, using a low-risk approach that produces consistent profits. Joe Ross is the creator of the Ross Hook ™ (Rh), and has set new standards for low-risk trading with his concepts of "The Law of Charts™" and the "Traders Trick Entry™" (TTE). Joe Ross has a few preferred trading signals, but we will present here the Ross Hook and the Traders Trick Entry.

Ross hook could be created on charts after:

1. First correction after a 1-2-3 pattern breakout;
2. First correction after a ledge pattern breakout (A ledge consists of a minimum of four price bars. It must have two matching lows and two matching highs. The matching highs must be separated by at least one price bar, and the matching lows must be separated by at least one price bar.);

First correction after a trading range breakout (A Trading Range is similar to a ledge, but must consist of more than ten price bars.).

The definitions are from "Law of Charts" by Joe Ross. This is very useful reading also.

During an uptrend when the market fails to make new high, a Ross Hook is formed. During a downtrend when the market fails to make new low, a Ross Hook is formed. Every directional price move reaches a point of exhaustion and needs new participants to continue. That is why the market takes its breath and at this point a Ross hook occurs. The Ross hook could be identified when the market is trending not when it is in a phase of consolidation. We skip the signal if the market opens with gap beyond the Ross Hook.

With the Traders Trick Entry TTE we try to open position before the other traders. We can make profits in trading only if we take other people's money. We have to learn how we can be one step ahead of the other market players. When Ross Hook, 1-2-3 pattern or other chart formation occurs most of the traders will place their orders at these levels. The Big boys know this very well and often target these order to make easy profits. They move the prices towards the nearest major level and activate the orders around only to reverse the price movement towards the stop losses. TTE is designed for such cases. When we see Ross hook and expect a test of this level we try to open a position early and make a nice profit if the break is successful with good risk/reward ratio. In most of the cases if the break of the Rh is false we can close our position with small profit



Long Position

1. The high of the last period is lower than the high of the previous Ross hook is formed;
2. The price retraces lower and the high of every period is lower than the previous one. The retracement should be 3-5 periods max;
3. We place a buy order above the high of the last period with stop loss below its low;
4. When the long position is opened we place limit order according to our money management rules. We suggest closing part of the position and move the stop loss to break even when the Rh level is reached.

Short Position

1. The low of the last period is higher than the low of the previous Ross hook is formed;
2. The price retraces higher and the low of every period is higher than the previous one. The retracement should be 3-5 periods max;
3. We place a sell order below the low of the last period with stop loss above its high;
4. When the short position is opened we place limit order according to our money management rules. We suggest closing part of the position and move the stop loss to break even when the Rh level is reached.

---- by : Svetlin Minev ------

Forex Trading Strategies : DMI and Psar

Directional Movement Index and Parabolic SAR
DMI and Parabolic SAR are very efficient trend indicators and are used often by traders for developing of their strategies. These indicators could be used separately and in combination with other technical studies. The DMI system is plotted by three lines: ADX, +DI and -DI, and could be used for generating of signals or trend filter:

Rising ADX shows that the market has a clear direction and is in a trending mode;

Declining ADX shows that the trend is losing steam or the market is in consolidation phase;
When ADX is above 20-25, the market is in a clear trend.

DMI system generates the following signals:
Rules for long position

1. ADX is above 25 and rising;

2. The Parabolic SAR goes form below to above the chart of the price. The bar when this happens is marked as Signal bar.

3. Long position is initiated when the price breaks 2-3 pips above the high of the Signal bar.

4. After the position is open an initial stop loss order is placed 2-3 pips below the low of the signal bar.

5. A limit order is placed according our Money management rules.
Rules for short position

1. ADX is above 25 and rising;

2. The Parabolic SAR goes form above to below the chart of the price. The bar when this happens is marked as Signal bar..

3. Short position is initiated when the price breaks 2-3 pips below the low of the Signal bar.

4. After the position is open an initial stop loss order is placed 2-3 pips above the high signal bar.

5. A limit order is placed according to our Money management rules.

Indicator chart



----- by ; Svetlin Minev / M.Popov ------

Forex Trading Indicator

Fx Indicator's ; Elliott Wave Oscillator, Juice and MA” -
the currency pair EURUSD (but you can choose any other, the selection of suitable values of stop-loss, profit and trailing stop),
a time-frame - M30 - MetaTrader4

Indicators Forex:
1) Exponential Moving Average EMA (200), applied to a close, the color blue.
2) Exponential Moving Average EMA (50), applied to a close, the color red.
3) Oscillator Elliott Wave Oscillator.
4) indicator of the level of Juice 0,0004.


Open a deal to BUY conclude with the following conditions:

1) Price is above the 2 moving averages EMA (200) and EMA (50), and the trend is upward, as indicated by the intersection of bullish Moving Averages (red above blue)

2) Oscillator Elliott Wave Oscillator crossed its zero line and closed above it.

3) Juice indicator is above its level of 0.0004.

Take-profit set to a value of 100 points from the entrance to the market.

Stop-loss - 20 points, trailing stop just 20 points.


Open a deal to SELL is when the following conditions:

1) Price is below the 2 moving average EMA (200) and EMA (50), while the trend is downward, as indicated by the intersection Moving Averages bearish (red below blue)

2) Oscillator Elliott Wave Oscillator crossed its zero line and closed below it.

3) Juice indicator is above its level of 0.0004.

Take-profit as set on the value of 100 points from the entrance to the market.

Stop-loss, respectively - 20 points, trailing stop - 20 points.

----- by ; ForexStrategies ----

Forex - Polarized Fractal Efficiency

Polarized Fractal Efficiency - PFE indicator - draws on Mandelbrot and fractal geometry to depict how pricing moves between 2 points during a definite time period. The more linear and efficient the price fluctuation, the shorter the distance the prices must move. the Polarized Fractal Efficiency indicator was created by Hans Hanula.

The PFE indicator is used for calculation of how trendy or overloaded the price action is. PFE <> 0 - indicate that the trend is up. The higher the reading the "trendier" and more efficient the upward movement. Readings around zero show jerky, less efficient shift and a balance between demand and supply



A hooking pattern often happens right before an efficient period finishes when the PFE appears to have maxed out, turns in the contrary direction towards zero, and then makes one last attempt at max. efficiency.

Stay with the trade all the way to the other extreme, unless it slows around the zero line. If it slows around zero, exit the trade and wait for a new max. efficiency entry.Trades can be entered in the opposite direction, with a stop just beyond the extreme of the hook.

Forex Trading Strategy - Bagovino Method

Forex Strategy “Method Bagovino” very simple, trade is conducted on the 1-hourly chart (H1), it must install EMA (close) with a period of 5 and 21. And as RSI indicator with a period of 21. All these indicators are in any standard set of terminal Metatrader 4.

In installations RSI indicator determines the level of 50.
Once the 5 and 21 EMA cross and up, and RSI indicator crosses a bottom-up level 50 - open the deal to buy (remember - the transaction should be opened only after the closing hour candles and candle digging the new hours!)
Conversely, as soon as the EMA cross on the graph down, and the RSI indicator falls below 50 - opening the deal to sell (remember - the transaction should be opened only after the closing hour candles and candle digging the new hours!) The best situation as soon as Both intersections occur simultaneously (the intersection of EMA and RSI indicator crosses a level 50).

This forex strategy at history has shown about 85% of profitable signals!
For work, you can choose any currency pair.

Examples see in the picture:

The first time (the situation on the left) - First there was the intersection Movings, but we had a deal only a few hours later, after the RSI has crossed the level of 50 and closed below it.

The second time (the situation on the right) - the intersection Movings and RSI occurred for 1 hour, an hour after closing a deal was made for the purchase.
Stop-loss recommend stavt at your discretion (subject to approval by you MM (risk management) - as you see fit, but I still recommend risking no more than 0,5-2% of the depot for each transaction and stop-loss set: purchase - below the previous low candle in the sale - maximum above last candle).

Also propose to use the indicator forex Vegas 1 Hour to determine the levels for the partial closure profitnyh trade positions. For example, you have opened a bargain on a signal Bagovino 0.3 lots. On the first line can close the 0.1 unit, and the rest put in the level “zero” (well suited for this trailing stop). On the second line cover is 0,1 lot, and have the remainder of the latter can close or you can just pull it into profit and into the “free floating”, treylenguya rest position such as at a distance of 25-50 points, while hoping to catch a trending move.

Forex Trading Platform - Meta Trader 5

The difference between MT5 and MT4
The function of MT5 is much stronger than MT4.

Firstly, MT5 terminal is able to use more and more financial products. At present, except of forex and futures, it can also use in other financial products including the stocks and the options.

Secondly, the function of MT5 becomes more and more. Here are details of new functions:

1. Twenty-one kinds of time phase analyze the quotes.
2. There are thirty-eight internal indicators.
3. Thirty-nine image object.
4. There are four Zoom modes.
5. Seventeen specialized display indicator styles.

Forex Scalping Strategy

Using Fibonacci Levels for Scalping the Forex Market
This article is part of our guide on how to use scalping tequniques to trade forex. If you haven't already we recommend you read the first part of series on forex scalping.

Scalping a strongly trending market is very different from scalping a quiet, tame market where price action is confined in a small range and is going nowhere. In a ranging market scalpers will buy or sell, and wait until the price comes back to where it left, and keep gathering small profits until the prevailing range pattern is eliminated. When trading a trending market, however, we must be careful to ensure that our orders follow the established trend. Counter-trend scalping is also possible, but since the preferred strategy of most successful traders is trend following, we’ll concentrate our attention on using fibonacci extensions in a trend following method in this article.

High volatility requires a strict approach to realizing both losses and profits. A scalper who is trading in a tame, range-bound market can be a bit more relaxed and arbitrary about his risk controls (they must still be applied with discipline, but not in the robotic manner which must be applied in trending markets), because the market is not expected to make sharp movements due to fewer market participants and a smaller amount of liquidity (not to mention that there is no news catalyst for strong price movements.) But a trend scalper must deal with such conditions at all times.

Trend Following Method
In this section we’ll discuss the use of the Fibonacci extension levels for the determination of trade direction while scalping trending markets. Scalping in trends can be difficult, because of the size of the sudden fluctuations, and the lack of clarity (at least in the short term) with respect to the eventual destination of the price. The Fibonacci extension levels are very useful in analyzing trends in all cases, and scalping is no exception to the rule

Our aim in using this indicator is identifying levels where the price may rebound. For drawing the extension, we’ll identify the beginning and end of the price movement which we expect to be extended, so to speak, in order that a new trend is created. In the 5-minute chart of the USDCHF pair, we have identified a sudden and sharp movement beginning at around 4 am on 23rd July, and decided to draw its extension after the first red bar where its momentum is temporarily checked. Upon drawing the extension in the indicated area, we notice the 61.8, 100, and 161.8 extensions of the first movement.

Careful examination of the chart above shows us not only that the price rebounded several times at the extension levels of the indicator, but also that these levels served as strong attractors pulling the price towards themselves. The 100 percent extension level, for instance, provided a support which prevented the price from “falling through” twice, as observed. And the other two levels similarly created performance bars for the trend which, once broken, created further momentum for the trend.

Trading against a trend is dangerous, and the risk of sudden reversals is no less dangerous for scalpers. As such we need a tool which will help us identify the general direction of the trend, so that even if we suffer some losses, eventually our gains will justify our trading activity. The Fibonacci extension level is a great tool for this purpose since it allows us to guess with a reasonable degree of accuracy the main momentum of the price action. In the above example, we’d be scalping the market by buying at the red arrows shown on the chart. If the price returned to the resistance or support levels indicated by the extension level, we’d stop trading for a while and await the market action to present some clarity (is the trend reversing?) But as long as the trend is intact our strategy would involve scalping between the extension levels to accumulate profits.

---- by; forextraders.com ----

Forex Trading Strategy

3 Simple Breakout Strategies You Can Use When Trading Forex
This article describes three different ways you can trade forex breakouts.
Trading breakouts is one of the most popular methods of trading the forex markets because you often get large moves after a period of consolidation. So with that in mind, I've listed below three basic strategies you can use to trade these breakouts.

The first of which is based on technical analysis, and in particular the Bollinger Bands indicator. Bollinger Bands are envelopes based on a moving average and a standard deviation and are most useful in showing areas of support and resistance through the two outer lines of the envelope.

Therefore when the price breaks out of either the upper or lower limit, this very often is a strong indication that a breakout is about to take place in the same direction. It's particularly the case after a period of consolidation where the bandwidth of the Bollinger Bands has narrowed out. For greater success you can use the breaching of one of the outer lines to gain your attention, and then wait for a pullback to either the EMA (5) or EMA (20), for example, for a good entry point.

The second method you can use to trade breakouts is also based on technical analysis and involves various Exponential Moving Averages, or EMA's for short. This is a method I have developed over the years that makes use of the 5, 20 and 50 period EMA's (you can also use the 100 or 200 period EMA as well).

What you do is wait until the price, along with the 5, 20 and 50 period EMA's have all flattened out and are all very close to each other. Then you simply wait for a strong breakout from this narrow range and take a position close to the EMA (5) when the breakout takes place. This can be very rewarding when you catch a good breakout, particular when you use longer time frames.

The final method is based entirely on price and uses no technical indicators at all. It's based on the fact that the price does not stay in the same range forever and will at some point break out of the current trading range.

I have to admit I don't use this method myself but there are various ways you can trade this way. Some traders like to use the previous day's upper and lower price range, and trade any breakouts of this range the following day. Similarly some traders wait until a very narrow price range has formed and then wait for a breakout to occur.

So overall there are various different ways you can trade breakouts, all of which have their merits. Despite being quite basic methods, they can be extremely lucrative because the price often moves strongly in one direction or the other after a sustained period of consolidation.

Forex Trading Strategy

Strategy for GBP/JPY
I’m going to explain the strategy I use to trade GJ and I’m going to be posting my weekly/daily analysis of this pair. I don’t use anything fancy, I use some basic stuff that most traders use and some common sense

The indicators I use are:
* Fibonacci retracement levels
* Trendlines/Channels
* 5 period simple MA
* Candlestick patterns
* Support/Resistance levels
* Momentum



As you can see it’s all simple and basic stuff except maybe for the fibonacci retracement, because every trader could use it differently. If you have any doubts about any of the stuff I use, either ask or just do a simple google search and you’ll find plenty of information about them.

Using the fibonacci retracement on different timeframes (1H, 4H, Daily, Weekly) is very important, because sometimes some of them overlap and that tells us where we might find strong support/resistance. I’ll post some examples.
If you have been following my posts on Auslanco’s thread, you will know that we use the 5SMA for a good entry point when a retracement occurs.
Most of the time, I trade based on the 4H chart, but I keep an eye on the daily chart and sometimes the weekly chart. I use the 1H chart for a good entry point. Any TF less than 1H has a lot of noise and it is very risky trading GJ on very small TF’s.

Using stop-loss, I always wait for my trade to go in my direction for about 50-100 pips before I move my SL and lock in a very small # of pips (10) and then just let it run until it reaches my TP, this way I don’t let a winning trade turn into a losing one, and if my SL gets hit, no worries coz +10 is way better than anything negative

Momentum & 5sma
Before using the Momentum indicator and 5sma, you must have auslanco’s QQE indicator. I’ll explain how to catch a retracement in this following example:
When QQE 4h is crossed upwards, and QQE 1hr is crossed upwards, and the Momentum at the beginning of the next 1h candle is pointing downwards, price will usually retrace to 1hr 5sma, it’s that simple.

---- by; KarmoStaji -------

Forex Trading Strategy

Oscillator and Momentum Indicator
Forex technical analysis uses mathematically derived indices to decide when to enter or exit a trade and has become by far the most common strategy among forex investors.
Investors in today's forex market can count on a variety of analysis tools to help them better guide their decisions and develop a consistent and systematic strategy, therefore minimizing impulsive decisions that can be devastating in this volatile market.

Such indices are mainly divided into two separate groups, oscillators and momentum indicators: the former try to predict a future change in trend, while the latter help assessing whether a trend that has already started will either continue or revert.

Oscillators in Forex

Some of the most widely used oscillators include:

* Stochastics: an oscillator that indicates whether the market is currently in an 'overbought' or 'oversold' phase. When the stochastics graph goes beyond a certain threshold, investors' reactions are usually to sell (overbought) or buy (oversold).
* Parabolic SAR: helps identifying the end of a trend in a timely fashion on a bearish or bullish market. It is plotted on the candlestick graph, and where the index crosses the candlestick graph itself, this is generally a seen as a symptom of a trend change.
* Relative Strength Index (RSI): similarly to stochastics, indicates the strength of the current trend on a scale from 0 to 100 — 0 to 50 for bearish, 50 to 100 for bullish.

Momentum Indicators in Forex

Some of the most common momentum (or lagging) indicators include:

* Simple Moving Average: average value of the last n candlesticks, where n is a configurable parameter.
* Exponential Moving Averages: similar to the simple moving average, but the most recent data has a much stronger influence over the value of the index, which means this indicator is much more sensitive to changes in value.

Combining Two or More Indices to Find Your Strategy

The very high number of indices available makes it unpractical to build an investing strategy based on the majority of them: forex investors are therefore required to pick and choose the tools that seem best suited to their own needs and bring the best results, and to figure out how to combine them all to create a profitable investing strategy.

An example of combining two indices to obtain a more accurate trend prediction is the so-called "moving average crossover": exploiting the characteristics of simple and exponential moving average — one highly subject to recent changes in trend, the other more equally weighted on previous data — it is possible to plot both on the same chart and decide to enter or exit a trade when the two cross each other.
Beyond Indexes: Fibonacci, Pivot Points, Elliott Waves

Technical analysis tools are not confined to indices only. There is a wealth of other mathematically or statistically derived factors, patterns, trend lines among which Fibonacci series, pivot points and Elliott wave theory applied to forex are just a few, valid ones.

Some of them — particularly those linked to the Fibonacci sequence — are speculated to hold true only because of their very widespread use by investors of all the world, which ends up influencing the market itself.
Technical Analysis vs. Fundamental Analysis

Even those who believe to have found the perfect combination of oscillators and indicators that can reliably anticipate market movements should never ignore fundamental analysis, the technique consisting in trading based of market news, which is often preponderating in short term trades: the right forex strategy is a wise mix that constantly keeps the two in consideration, without ignoring or underestimating their capabilities.

Forex ; Elder-rays

Elder-ray system, Developed in 1989, The Elder-rays use exponential moving average indicator, or EMA, the preferable period of which is 13 as a tracing indicator. The oscillators reflect the bears' and bulls' power.

The Elder-rays include the characteristics of trend following indicators and oscillators. Three charts for placing the Elder-rays are used: on one side - the price chart and EMA are placed, on two other sides - bulls' power oscillator, or just Bulls Power, and bears' power oscillator, or just Bears Power.

Elder-rays can be used either individually or in bunch with various other tools. While using them individually, it's important to remember that the EMA slope defines the trend movement, and position should be opened in its direction.
The Elder Ray is a very precise and effective means of highlighting discrepancies between bull and bear power and prices and helping to choose right time for the best trading opportunities.

Bulls and bears power oscillators are used for determining the moment for opening or closing of positions. One should open the following positions:

It's better to sell when:
1. The Bulls Power oscillator remains positive, but declines step by step;
2. The Bulls Power oscillator declines leaving the Bears' discrepancy;
3. The last bottom of the Bulls Power oscillator is lower than the previous one;
4. There is a decreasing trend defined with the EMA fluctuations

The Elder Ray index actually consists of two indicators:
"Bull Power" (Daily High - n period moving average) and
"Bear Power" (Daily Low - n period moving average).

It's better to purchase when:
1. The Bears Power oscillator is negative, but still growing;
2. The Bears Power oscillator increases after the Bulls discrepancy;
3. The last peak of the Bulls Power oscillator is higher than the previous one;
4. There is an increasing trend defined with the EMA fluctuations



It is better to keep back at the positive values of the Bears Power oscillator and not to open short positions when the Bulls Power oscillator is negative. The best time for trading is discrepancy between the Bulls and Bears Power and prices.
In fact, the Elder Ray index includes 2 indicators: "Bear Power" (Daily Low - n period moving average) and "Bull Power" (Daily High - n period moving average)/

Bear Power is used to calculate the potential for the price to fall under the moving average. And Bull Power is used for calculating the potential for the price to grow over the moving average. There are short positions when the Bull Power is more than zero and there is a bearish discrepancy. And Long positions are assumed when the Bear Power remains under zero and there is a bullish discrepancy.

Forex Trading System

Profit With Forex Opening Range Breakouts
Many forex traders like to incorporate forex breakouts into their overall trading strategy because they can be extremely profitable. When a price finally breaks out of a tight trading range, many traders tend to jump on board and carry the price further away from this trading range, which is why this strategy is so effective.

Focus on Opening Range Breakouts

One of the most popular ways of trading these breakouts is by focusing specifically on overnight / opening range breakouts. By that I mean the opening hours of the new trading day. I myself tend to focus on the hours between 00.00 and 06.00 GMT and predominantly concentrate on the British and European-based pairs such as the GBP/USD and EUR/USD pairs, for instance.

These hours are notoriously quiet and yet these few hours before the busy opening session set the tone for the rest of the day. You will often find that the price will stay confined in a fairly tight range during these six hours or so and when the UK and European markets open, the price will trend significantly in one direction and will often break strongly out of this initial trading range.

Therefore a profitable strategy is to open a long position when the high point of this opening range is breached and open a short position when the low point is breached. There are various ways you can put this system into practice. You can either open a position as soon as the price crosses the line or as soon as the breakout candle closes, or you can wait for a pull-back and then jump on board if the price continues to move in the direction of the initial breakout.

All of these methods tend to work quite well and there is a logical reason why this is the case. The fact is that every currency pair has an average daily range, i.e the average number of points between the high and low points for a given trading day. So on those days where the opening range is very narrow, this initial range will be a mere fraction of the overall average, so therefore you can expect some big price moves to occur during the rest of the day either above or below the overnight range.

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Forex Trading with Elliott Wave

The Elliott Wave Principle, developed by Ralph Nelson Elliott in 1930s and 40s, is a powerful analytical tool that is still being used for forecasting stock market behavior. The basic concept of this Principle is that stock market prices rise and fall in distinct patterns and that those patterns can be linked together into waves.

Since it was first published, this classic guide to the Elliott Wave Principle has acquired a cult status globally among technical analysts. With subsequent new editions, the contributors have refined and enhanced the message of the original publication while retaining all the predictions from past editions.

Elliott Wave Counts may be summed up as follows:

Wave 1 is normally the most weak of the impulse waves. It is based on short covering of the bears from a previous move. The next Wave is created at the end of the first Wave and after the currency pair is sold off.

Wave 2 comes to an end when the market fails to make new lows.

Wave 3 is the most lengthy and most strong of the impulse waves. This leads to strong currency buying or selling in the trend's direction that usually starts slowly, but tends to accelerate as it breaks to new highs above the top of Wave 1.

A correction will occur, especially after a strong trend. Traders will then start making profits, paving the way for Wave 4.

Again, the currency pair will rally ushering in the Wave 5 rally. This Wave is usually supported by the retail traders and not institutional buyers and tends to lack the momentum generated in the third
images
This is in a nutshell Elliott Wave analysis can be deployed to enhance traders forex swing trade evaluations. A closer look into the Elliott Wave theory and other strategies could be useful for traders and enable them to use these as tools for increasing their forex swing trade opportunities.

When evaluating the Forex market for swing trade opportunities, the focus should be placed on forecasting directional changes for a given currency pair, relying on technical analysis. In this analysis there are different indicators. The most reliable tool used to predict Forex market swings is Elliott Wave analysis that can be used to identify trends and countertrends, continuation and exhaustion of trends and also to evaluate the potential of pricing targets of a trend.

Elliott strongly believed that the market's movement was a direct result of the mass psychology of the time and that the stock market is a fractal that is an object similar in shape, but at different scales. An apt example of a natural fractal is a stalk of broccoli. The stalk and individual branches look strikingly the same because the branches are smaller in scale. According to Elliott this mass psychological move resembles the herding tendency in human beings.

Summing up, the market price actions are not the cause of economic growth or slow down, but the reflection of the mass psychology of investors. If the mood of the investing public is upbeat then a bull market ensues. This is counter to what most individual perceive, that is because there is a bull market the mood of the investing public is upbeat

---- by;Forex Cycle ----

Forex - RSI and Divergence

Technical indicators are constructed by manipulating some aspect of price such as a moving average of prices over a 10 day period. The Relative Strength Indicator (RSI) tries to anticipate a change in the trend.

This is a leading indicator of a trend change. The results are used to deliver messages about the strength of the market. It is called an oscillator because the indicator readings are converted into percentage results which range from 0% to 100%. The position of each day’s indicator reading gives the trader an indication of the strength, or weakness, of the existing price trend.

The RSI is calculated by monitoring changes in the closing prices of the stock. The number of higher closes is compared to the number of lower closes for the selected period.


The RSI compares the internal strength of a stock by looking at the average of the upwards price changes and comparing it with the average of the downward price changes.

The results are expressed as a percentage, providing the upper and lower boundaries. The plotted results oscillate between these two levels and give traders information about the speed and acceleration of the changes.

Traders use either a 14, 9, or 7 day period in the Relative Strength Calculation.
In this sense the RSI is very similar to a stochastic and uses similar principles. Where the stochastic quantifies the ability of the market to close near the high or the low of the day, the RSI quantifies the strength of the way the market moves higher, or lower. The over-bought and over-sold signals are the same as any oscillator, although with an RSI they are traditionally set at 70% and 30%.
The most significant trading signal delivered by any oscillator style indicator is a divergence signal. This sounds complicated but it just means that the significant valley patterns shown by the RSI trend in the opposite direction to the significant valley patterns as shown by the price line chart. A valley is created by two distinct lows that each precede a rally from a downtrend. This builds a valley in the price chart. The lows of these valleys are joined with a short trend line as shown.
The corresponding lows on the RSI indicator are also joined by a short trend line. When the RSI line slopes differently from the price chart line, a divergence occurs. When these valleys form below the 30% area on the RSI, or form peaks above the 70% level, they are most reliable. Oscillator activity between these levels is not used to find divergence signals.
signal does not occur every time a trend changes, but when it does, it delivers a strong confirmation signal that a trend break is likely.
RSI divergence signals often appear in advance of a trend change, but they are not very good at suggesting the time of a trend change. The divergence signal may appear just as the trend changes, as in the chart extract, or several weeks before. Traders use the RSI divergence as an early warning signal to enable them to prepare for a trend change.
When the RSI and price chart lines move in the same way we get a confirming signal that the existing price trend is unlikely to change. These signals are not very important because we can get the same information from just looking at the chart.
The RSI is one of the very few oscillator style indicators where trend lines and support and resistance lines can be effectively used. These are used as signals to confirm the trend shown on the price chart. When other chart patterns suggest action, then the RSI trend line might also confirm this. When the RSI is used like this it does not give the trader any distinct advantage.

signal does not occur every time a trend changes, but when it does, it delivers a strong confirmation signal that a trend break is likely.
RSI divergence signals often appear in advance of a trend change, but they are not very good at suggesting the time of a trend change. The divergence signal may appear just as the trend changes, as in the chart extract, or several weeks before. Traders use the RSI divergence as an early warning signal to enable them to prepare for a trend change.
When the RSI and price chart lines move in the same way we get a confirming signal that the existing price trend is unlikely to change. These signals are not very important because we can get the same information from just looking at the chart.
The RSI is one of the very few oscillator style indicators where trend lines and support and resistance lines can be effectively used. These are used as signals to confirm the trend shown on the price chart. When other chart patterns suggest action, then the RSI trend line might also confirm this. When the RSI is used like this it does not give the trader any distinct advantage.